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Today’s report – the most detailed yet into the suicide bombings – cleared MI5 and police of blame despite new evidence showing the extent of their prior knowledge of the terrorists.

The report by the Parliament Intelligence and Security Committee (ISC) published today said that it was “understandable and reasonable” that the bombers had not been detected and that the judgments made by the security service before July 2005 could not be criticised.

The conclusion came despite the revelation that the ringleader of the 7/7 attacks, Mohammed Sidique Khan, and another of the bombers Shezhad Tanweer had been repeatedly observed by officers while meeting other known terrorists more than a year before the London bombings.

The ISC report highlighted severe shortages in personnel that led to possible terror suspects never being investigated or put under surveillance. In 2004 MI5 failed to monitor 54 “essential” targets.

The committee concluded that resources were so stretched agents could not even assess whether “desirable” targets should be examined in more detail unless they were known to be plotting an attack.

But the relatives of victims reacted angrily to the ISC’s conclusion. They said it was proof an independent, public inquiry was now needed into the attacks on the Underground and a bus in which 52 people were murdered by four suicide bombers.

Sean Cassidy, 61, whose 22-year-old son Ciaran died on the tube at Kings Cross, said today: “This is a complete whitewash. We now need a public inquiry. It is the only thing that will answer all the questions. It has to be independent. We are four years on and there are still no answers.”

John Falding, whose partner Anat Rosenberg, 29, died on the Number 30 bus, said: “These findings are very disappointing. It has not really taken us much further than the ISC’s previous report three years ago. It was painful reading then and it is clearly painful reading now. To know they came so close to catching the terrorists is hard to take.

“It is very clear there was a breakdown in communications between police, Special Branch and MI5. I have some sympathy for MI5 and the police. The main culprits are the people who didn’t provide them with sufficient resources to carry out the surveillance.”

Rachel North, who was injured in the bombings and who has led the campaign for an official inquiry, said: “Today we have seen extraordinary levels of detail which manages to fundamentally miss the big picture. There was a failure of imagination, a failure of intelligence and a failure of communication that led to the tragedy.”

Clifford Tibber, a lawyer representing 25 victims’ families and survivors, said: “All they have done is gone back and asked the same questions as they did in the previous failed report and got slightly different answers and reached precisely the same conclusions.

“This isn’t an independent committee as they claim. It has been a group of MPs that have been hand-picked by the Prime Minister. We don’t know what evidence they received in secret, if it was challenged and how it was challenged. They got it wrong the first time round so how can the public possibly have confidence in this report.”

Today’s report lists four separate meetings attended by Khan, Tanweer and other known terrorists and also gives details of how M15 twice followed Khan’s car back to addresses in Leeds.

It also revealed how two phone numbers linked Khan to another plot to blow up the Bluewater shopping centre and Ministry of Sound nightclub.

In a further disclosure today’s report also reveals that a photograph of Khan was taken in 2001 when he attended an outdoor camp with other terror suspects.

Despite this, however, MI5 failed to identify Khan or Tanweer – both of whom were judged to be potential “facilitators” involved in low-level financial fraud rather than active attack planning – until after the 7 July bombings had occurred.

It states that MI5 and police were right to focus on other higher priority terror suspects, and insists that given what was known at the time there was nothing to indicate that any of the 7/7 bombers presented a threat to the UK before carrying out their deadly mission.

“We cannot criticise the judgment made by MI5 and the police based on the information that they had and their priorities at the time,” the report states. “Even considering material that was discovered after 7/7, we believe that decisions made in 2004 and 2005 were understandable and reasonable.”

The report adds that MI5 would need an unachievable “several hundred thousand officers” to provide comprehensive intelligence coverage. It currently employs 3,500.

The report – which is based on evidence submitted in private by MI5, police and others – was ordered in response to evidence that emerged during the trial of the Bluewater plotters and other recent terror prosecutions and set out in detail all that was known about the links between Khan and Tanweer and other terror suspects.http://www.thisislondon.co.uk/standard/article-23694423-details/Inquiry%20into%207%207%20branded%20%27whitewash%27%20by%20victims/article.do